Flashcards
What law deals with credit, APR, and advertising of consumer loans?.
TILA/REGULATION Z
Which regulation prohibits kickbacks?
RESPA
Which regulation
requires the lender to cancel PMI when the loan reaches 78% LTV?
HPA – Homeowners Protection Act
Which regulation prohibits fee splitting?
RESPA
“X” is the letter used to describe which Regulation?
RESPA
RESPA is the acronym used to describe which Law?
Real Estate Settlement Procedures Act
What type of mortgage requires a non-refundable funding fee?
VA Loan
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower DEFAULTS on the loan?
Acceleration Clause
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower TRANSFERS the loan?
Alienation Clause
What does CFPB Stand for?
Consumer Financial Protection Bureau
What two laws created the CFPB?
Dodd Frank Act and Consumer Finance Protection Act
Which regulation is designed to help meet the credit needs of the communities in which it operates?
CRA – Community Reinvestment Act
Under ECOA rules and regulations, how many days does the borrower have to request a copy of an appraisal report if the application was denied?
90
Under ECOA rules and regulations, if an application for credit is denied, and if requested by the borrower - how many days does the lender have to provide a copy of an appraisal report?
30
If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the appraisal be provided to the borrower?
3 business days prior to the loan closing
Conforming Loans follow the guidelines of which regulators?
Fannie Mae and Freddie Mac
Which regulation requires the lenders to “BE EQUAL” when extending credit to borrowers?
ECOA – Regulation B
How old must a borrower be to qualify for a Reverse Mortgage?
62 years old
Which regulation has the primary function of preventing Identity Theft?
FACT Act
Which regulation has SECTION 114 (Red Flag/Address Discrepancy) Rules?
FACT Act
Which regulation requires the creditor to verify the VALIDITY of any change of address received?
SECTION 114 (Red Flag/Address Discrepancy Rules) of the FACT Act
What is the payment method used in a reverse mortgage that allows the homeowners to receive a monthly check while living in the property?
TENURE Method
What is the fraud scheme where a borrower uses someone else’s name to purchase the property, but that person WILL NOT be living at the property?
Straw borrower
What type of lender “insures” mortgages?
FHA approved lenders
What type of lender “guarantees” mortgages?
VA approved lenders and USDA approved lenders
What is the entity that loans money to fund purchases in rural areas?
USDA/Dept. of Agriculture
What is the value remaining in property after all liens and debts have been paid?
Equity
A borrower is refinancing his home. How much time does Reg Z give him to change his mind (rescind)?
3 days
Which Regulation established the 3-day right of rescission rule?
TILA/REG Z
Redlining is part of which regulation/Law?
Fair Housing Act
Blockbusting is part of which regulation/Law?
Fair Housing Act
Steering is part of which regulation/Law?
Fair Housing Act
Trying to convince a homeowner to SELL his home by implying that another race/ethnicity is moving in the neighborhood is called?
Blockbusting/panic selling
Trying to convince a homeowner to PURCHASE in a particular neighborhood based on his race, religion or ethnicity is called?
STEERING
Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?
Redlining
What does HOEPA stand for?
Home Ownership and Equity Protection Act
HOEPA Loans are part of which larger regulation?
Reg Z/TILA
High Cost Loans are part of which larger regulation?
Reg Z/TILA
High Priced Loans are part of which larger regulation?
Reg Z/TILA
Section 32 (High Cost) Loans are part of which larger regulation?
Reg Z/TILA
Section 35 (Higher-Priced) Loans are part of which larger regulation?
Reg Z/TILA
MDIA ACT is part of which larger regulation?
Reg Z/TILA
Mortgage Disclosure Improvement Act (MDIA) is part of which larger regulation?
Reg Z/TILA
What is another name for Annual Percentage Rate?
Effective Rate
What is another name for Interest Rate?
Note Rate or Nominal Rate
PITI divided by Gross Monthly income is referred to as what?
Housing Ratio or Front-End DTI
PITI + monthly debt divided by Gross Monthly income is referred to as what?
Total Obligation Ratio – Back-end Ratio
How long must TILA Disclosures be kept?
2 years (exceptions – LE is kept for 3 years and CD is kept for 5 years)
What is the maximum amount of time that NEGATIVE info can remain on a credit report?
7 years
What is the maximum amount of time that a bankruptcy can remain on a credit report?
10 years
Which law/regulation states that a Bankruptcy can only remain on your credit for a MAX of 10 years?
FCRA – Fair Credit Reporting Act – Reg V
Which law/regulation states that negative information can only remain on your credit for a MAX of 7 years?
FCRA – Fair Credit Reporting Act – Reg V
Which law allows a consumer who has had her credit card used by an identity thief to place a credit freeze on her credit report?
FACT ACT
Which law requires creditors to TRUNCATE debit and credit card info on receipts?
FACT ACT
Which regulation requires that loan officers must take measures to secure and dispose of (burn and/or shred) a borrower’s sensitive credit information?
FACT ACT
Which regulation states that if a borrower is denied credit, he can receive a FREE copy of his credit report?
FCRA – Fair Credit Reporting Act
REG V
Which regulation states that if a borrower is unemployed, he can receive a FREE copy of his credit report?
FCRA – Fair Credit Reporting Act – Reg V
Which regulation states that if a borrower is on SSI or Disability, he can receive a FREE copy of his credit report?
FCRA – Fair Credit Reporting Act – Reg V
Which regulation states that if a borrower has been the victim of fraud, he can receive a FREE copy of his credit report?
FCRA – Fair Credit Reporting Act – Reg V
Which regulation states that a borrower can receive a FREE copy of his credit report once a year (no reason or requirement necessary)?
FACT Act
During the loan process, if you ask a borrower if he is single…which law are you violating?
ECOA – Regulation B
Which regulation states that the only correct way to ask about a borrower’s martial status is: are you married, unmarried or separated?
ECOA – Regulation B
Who is responsible for providing the closing disclosure to the borrower?
The Creditor/Lender
Who is responsible for providing the closing disclosure to the Seller?
Settlement Agent/Title Agent
Which regulation requires the borrower to receive the Loan Estimate?
TILA – REG Z
Which regulation requires the borrower to receive the Closing Disclosure?
TILA – REG Z
Which regulation requires the borrower to receive the Loan Estimate within 3 business days?
RESPA – Regulation X
Which regulation requires the borrower to receive the Closing Disclosure within 3 business days?
RESPA – Regulation X
As it relates to the loan estimate – what is the definition of a Business day?
Any day that the Creditor’s office is open for business
According to TILA/REG Z – what is the definition of a Business day?
Any calendar day except for Sunday and Legal Holiday
During the loan process, where do you find HMDA government monitoring information?
Section X (Information for Government Monitoring Purposes) of the 1003 (URLA) application
What does HMDA stand for?
Home Mortgage Disclosure Act
What appraisal approach is used when appraising property that has been destroyed by a natural disaster?
Cost Approach or replacement cost approach
In the sales comparison approach, how many comps are required?
3
What is another name for the Financial Services Modernization Act of 1999?
Gramm-Leach-Bliley Act
How many days does a CREDITOR have to notify a consumer of the status of a credit application (denied, approved, need more info)?
30 days
Which regulation states that a creditor has 30 days to notify a consumer of an application approval or denial?
ECOA – REG B
How many hours of Ethics is required to be taught in the 20hr Pre-licensing course?
3
How many hours of Ethics is required to be taught in the 8hr Continuing Education course?
2
How many hours of Federal Law is required to be taught in the 20hr Pre-licensing course?
3
How many hours of Federal Law is required to be taught in the 8hr Continuing Education course?
3
A mortgage that includes more than one parcel of land is called what?
Blanket Mortgage
A mortgage that includes appliances such as a stove or refrigerator is called what?
Package Mortgage
Which closing document itemizes the final closing cost and items paid in connection with the loan for the borrower?
Closing Disclosure
Which law deals with APR and Advertising of credit terms?
TILA – REG Z
What is the official name for the 3/7/3 rule?
Mortgage Disclosure Improvement Act or MDIA Act
What regulation requires the lender to perform an escrow analysis?
RESPA – REG X
Which law states that it is a violation to discriminate against a potential borrower on public assistance?
ECOA – REG B
What two classes are protected under Fair Housing Act - but NOT under ECOA?
Disability/Handicap and Familial Status
What three classes are protected under ECOA but NOT under Fair Housing?
Age, Marital Status, and Public Assistance
What is another name for a non-conforming loan?
Jumbo Loan
What is another name for a Jumbo loan?
Non-Conforming Loan
The front Ratio for an FHA loan is 31%… what is the back ratio?
43%
The front Ratio for a Conventional loan is 28%… what is the back ratio?
36%
The Ratio for a VA loan is?
41%
What is another name for the Bank Secrecy Act?
The anti-money laundering act
What is another name for the Anti-Money Laundering Act?
Bank Secrecy Act
Which law requires banks (financial institutions) to keep records of deposits of $10,000 made in cash?
Anti-Money Laundering Act/Bank Secrecy Act
Which law requires MLOs to file suspicious activity that might be a sign of tax evasion, money laundering, or other possible criminal activity exceeding $5,000?
Anti-Money Laundering Act/Bank Secrecy Act
If you fail the test, how long must you wait before retaking the exam?
Required 30-day waiting period before retaking a failed test
What does AUS stand for?
Automated Underwriting System
What does SAFE Act stand for?
Secure and Fair Enforcement Act
What does HERA stand for?
Housing and Economic Recovery Act
What does HPA stand for?
Homeowner’s Protection Act
What does GLBA stand for?
Graham Leach Bliley Act
What type of property is covered under RESPA?
1 – 4 unit Residential Property
Which regulation allows lenders to OBTAIN information regarding a borrower’s ethnicity, to help identify possible discriminatory patterns?
HMDA – Regulation C
When can a borrower request cancellation of PMI?
When LTV Reaches 80%
When must the lender automatically cancel PMI?
When the LTV reaches 78%
What is the primary market?
Where borrowers/consumers obtain mortgage loans
What is the secondary market?
Where lenders buy and sell loans from one another
Name the two Government Sponsored Enterprises (GSEs)?
Fannie Mae
Freddie Mac
Which GSE is the Federal National Mortgage Association?
Fannie Mae
Which GSE is the Federal Home Loan Mortgage Corporation?
Freddie Mac
TILA applies when credit is payable by written agreement in __________ installments?
More than 4 installments
Which AUS system does Fannie Mae use?
Desktop Underwriter (DU)
Which AUS system does Freddie Mac use?
Loan Product Advisor (formerly Loan Prospector)
How often must National DNC and internal DNC list be updated?
Every 31 days and records must be maintained for 24 months
An appraisal is valid for _____ months?
An appraisal is valid for 6 months (updated 1/1/2020). It must be re-certified if the appraisal will be 4 months (120 days) old or more at closing.
What is the penalty for violating the DNC list?
$42,530
Which regulation allows the borrower to sue for 3x’s the amount paid for title insurance?
RESPA Section 9
If money was collected, and a borrower rescinds, how long does escrow have to return the funds?
20 days
MLOs seeking to become licensed in other states or who seek to move from a bank to a non-bank lender will be allowed ______ days of transitional (temporary) authority.
These individuals are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing for up to 120 days while they are applying to the state agency for their new license.
What is the only fee that can be collected prior to delivery of the Loan Estimate?
Credit Reporting fee
Once an individual is unlicensed for ________ years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.
3 years
What law requires that the equal housing lender slogan and/or logo be placed on all advertising?
Fair Housing Act
How long does a person have to sue for a violation under the Fair Housing Act?
1 year
Once unlicensed for ______ years, the individual must retake and pass the National Exam.
Once unlicensed for five (5) years, the individual must retake and pass the National Exam.
If the individual has worked as a registered MLO during this unlicensed period, he is credited for that time.
What is the site where you can receive a free copy of your credit report, according to the FACT Act?
www.Annualcreditreport.com
The lender must provide the borrower with a list of ______ HUD approved counselors.
Ten (10) HUD approved counselors
What regulation is designed to protect consumer’s non-public information (NPI) and how it can and cannot be shared?
GLBA
Which law requires lenders to verify the date of birth, SS# and ethnicity of a person getting a loan in the United States?
U.S. Patriot Act
If you fail the test 3 times, what is the waiting period to retest?
Six (6) Months/180 days
Under HMDA, how long must a lender keep the Loan Application Register (LAR)?
3 years
What day does your license expire each year?
December 31st
What is the renewal period to keep your license current?
NOV 1 – DEC 31st
What are the two (2) types of mortgages that require that the homeowner meet with a counselor – to ensure that the he/she understands how the program works?
Reverse mortgages and Higher-Priced (Section 35/HMLs) mortgages.
Which Act requires companies to give consumers privacy notices?
Gramm-Leach-Bliley
Which act was implemented to promote financial stability and to protect consumers from abusive practices?
Dodd Frank Act
What is RESPA Section 6 responsible for?
Mortgage Servicing
What is RESPA Section 8 responsible for?
Kickbacks, Fee Splitting, and Unearned fees
What is RESPA Section 9 responsible for?
Title Insurance
What is RESPA Section 10 responsible for?
Escrow Accounts
What is the max mortgage term (length) allowed for a mortgage to be classified as a Qualified Mortgage?
30 years
Until the loan estimate has been delivered, what fee can a MLO charge?
Credit Report
Estimate of charges and terms for settlement services must be available for at least _________ business days from the time the Loan Estimate is provided?
10
If a new (revised) Loan Estimate is required because of a changed circumstance, it must be disclosed and received by the borrower ________ days prior to consummation of the loan?
Four (4) days!
The “initial” loan estimate is due at or “within” 3 days of the application.
A “revised” loan estimate is due “within” 3 days of the notice of change.
But in ALL CASES, it must be delivered four (4) days prior to consummation!
Because the soonest a loan can close (per the MDIA Act is 7 days! (3 + 4 = 7)
Flood Insurance must be purchased from the _____________.
Flood Insurance must be purchased from the National Flood Insurance Program (NFIP).
The minimum amount of flood insurance required for a home in a flood zone is $_______.
$100,000
The max amount of flood insurance required for a home in a flood zone is $_______.
$250,000
The loan estimate must be retained for how long?
3 years
What does HMDA stand for?
Home Mortgage Disclosure Act
What does NOV stand for?
Notice of Value
What does CRV stand for?
Certificate of Reasonable Value
What does the “R” stand for in the acronym NMLSR
REGISTRY
What is a Mortgage Call Report (MCR)?
Quarterly Report required by MLO Company and Mortgage Brokers
Loan originator organizations must keep compensation records for how many years?
3 years
Mortgage companies must submit a residential loan origination activity report to the NMLSR every:
Three months
Which Act specifically prohibits blockbusting?
The Fair Housing Act
What law protects homeowners from foreclosure-prevention scams?
Mortgage Assistance Relief Services Rule
Which law requires financial institutions to keep detailed records of cash transactions exceeding $10,000 (withdrawing, depositing or transporting)?
Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
What type of federal report is filed when financial institutions detect suspicious activity?
Suspicious Activity Report
Which law requires businesses to print only the last five card numbers on a credit card receipt?
FACT Act
What happens if the acceptable variance between the Loan Estimate and the Closing Disclosure is exceeded?
The excess is refunded to the borrower within 60 days
A higher-priced home loan is one that has:
APR exceeds the average prime rate by at least:
- 5% for first-lien mortgage
- 5% for a first lien Jumbo loan, or
- 5% for a subordinate mortgage lien.
What is the shortest time in which a mortgage purchase loan can close?
7 business days
Which law states that MLOs are required to report any suspicious activity exceeding $5,000 that may be a sign of tax evasion, money laundering, or other possible criminal activity?
Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
Denise reviewed her credit report and discovered a few discrepancies and would like to dispute them – once disputed, how long does the credit reporting agency have to respond to the dispute?
30 days
The Red Flags Rules are also known as
________
The Red Flags Rules are also known as Section 114 rules under the FACT Act
What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages?
TILA
Which law requires that the “Know Before You Owe” booklet be given to the borrower?
RESPA
Lenders must maintain an escrow account for higher-priced (Section 35) mortgages for a minimum of:
5 years
What is the Fannie Mae appraisal report form?
URAR - 1004 Form
What lien has the highest priority and is paid off first when a property is sold?
Property Tax
What document is assigned along with the mortgage?
Promissory note
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder?
Subordination
What does Ginnie Mae do?
Guarantees Ginnie-Mae mortgage-backed securities
Which law requires lenders to train employees to recognize the Red Flags of identity theft?
FACT Act
Which law entitles a borrower to a copy of his appraisal report?
ECOA
According to the GLB Act, a person who completes a single transaction with a creditor is known as a(n) customer or a consumer?
A consumer
The lowest possible interest rate for an ARM loan is known as the:
Floor
If an applicant works 30 hours every week and is paid $25.00 per hour, what is the applicant’s monthly income?
$3,250
$25.00 x 30hrs a week x 52weeks in year / 12
What law prohibits discrimination in the sale and lease of property?
Fair Housing Act
The term “20 basis points” expressed as a percentage is:
0.20%
The late fee for a conventional loan is:
5% of principal and interest
A funding fee is required for a:
VA loan
The mortgagee is the:
Lender
Who does Fannie Mae hold responsible for the quality of an appraisal?
Lender
Which law prohibits discrimination by lenders when extending credit?
Equal Credit Opportunity Act
A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value?
83.3%
$150,000/$180,000
How many days does a lender have to send an adverse action notice?
30
The enforcement of a lien is known as a:
Foreclosure
What minimum percentage of ownership qualifies an individual as self-employed?
25%
Which law defines the right of rescission?
Truth-in-Lending
How long after the application date must social security payments continue to be received in order to count as income?
3 years
Which clause in a mortgage allows a lender to increase the interest rate?
Escalation
A VA appraisal is known as a:
CRV or NOV
Which types of loans are meant for rural areas?
USDA – Section 502
The purchase price of a home is $200,000 and the loan amount is $180,000. The borrower pays 6% interest with 1 discount point and 1 origination point. What is the cost of the points?
$3,600
$180,000 x 2%
What is the maximum allowable amount of VA seller concessions?
4%
The late fee for a VA loan is:
4% of principal and interest
What is the clause in a mortgage that is also known as a “due on sale” clause?
Alienation
Alimony payments must continue to be received for how long after the application date if they are to be included as income?
3 years
Credit reports are good for how many days after they are pulled for qualifying purposes?
120
Which law protects an individual’s confidential information?
Gramm-Leach-Bliley Act
The Mortgage Servicing Disclosure Statement must be sent to the borrower within how many business days of receiving a loan application?
3 business days
After an escrow account analysis, money must be refunded if the over-paid amount equals or exceeds:
$50
The maximum escrow cushion that a lender can require is:
Equal to 2 months (1/6th)
The fluctuating economic indicator used in an ARM is the?
INDEX
The Home Mortgage Disclosure Act (HMDA) was implemented by the:
Federal Reserve Board
Tax liens can be kept in the credit report for?
7 years
The range of possible credit score is:
300-850
The Red Flag Rule is concerned with:
Identity theft
Which type of mortgage is funded by the United States Department of Agriculture?
Section 502 loans/USDA Loans
What type of mortgage requires that the lender provide the borrower with the CHARM booklet?
Adjustable Rate Mortgages
For how many years must a lender retain the Escrow Cancellation Notice?
2 years
For how many years must a lender retain the Partial Payment Policy?
2 years
The mortgagor is the:
Borrower
Which law (regulation) is designed to create financial stability?
The Dodd Frank Act
Which appraisal approach is BEST for appraising vacant land, new construction or for unusual or special purpose?
Cost Approach
What establishes the lien position?
Date and time of recording
What type of mortgage has a fixed interest rate and increasing payments?
Growing equity mortgage
A graduated payment mortgage:
Has payments that start low and increase over time
If there is no minimum monthly credit card payment, what percent of the balance is used in the calculation of monthly debt?
5%
The Fannie Mae Total Obligations Ratio (back-end ratio) is:
36%
A borrower is paid $3,500 bi-weekly – what would be considered the gross monthly income?
$7,583.33
$3,500 x 26 ÷ 12 = $7,583.33 per month
Company or individual who, for a fee, places loans with lenders, but does not service such loans is called a ___________?
Mortgage Broker
Fannie Mae generally wants how many months of liquid financial reserves after closing?
2 months
The Penalty for Mortgage Fraud is ___________.
$1,000,000 or imprisoned not more than 30 years, or both.
A co-borrower whose income is used to qualify must sign the:
Mortgage and the note
Which form is used to summarize the information in the loan package on a FHA loan?
Fannie Mae 1008 – Transmittal Summary
An appraisal must be re-certified if it is older than:
4 months
The most probable price which a property should bring in an open market is:
Market value
The appraisal approach that best applies to vacant land is:
Cost Approach
The appraisal approach that best applies to a school is:
Cost Approach
Who handles complaints regarding mortgage loan rejections?
CFPB
What gives someone other than the owner the right to be on the property for a specific purpose?
Easement
What is a clause in the deed that limits the future use of a property?
Deed restriction
The most common type of legal description for residential subdivisions is:
Lot and block
The most accurate type of legal description for residential subdivisions is:
Metes and bounds
What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank?
Warehouse funding
The late fee for FHA and VA loans is:
4%
When a lender sells a mortgage loan to another lender this is called:
Assignment of mortgage
What type of mortgage fraud scam occurs when a buyer borrows the down payment from seller without the lender’s knowledge?
Silent second
What can result in a $1,000,000 fine and 30 years in prison?
Acts of mortgage fraud
After loan servicing is transferred, the new servicer cannot assess late fees for a period of ______ if the payment is made to the previous lender by mistake.
60 days
Which document is used in place of a mortgage to secure the payment of a promissory note? (This method is used in many states.)
A deed of trust
“APR” means…
Annual percentage rate. This is the cost of credit expressed as a percentage.
A Reconveyance Clause is:
The method used to transfer title for a property following full payment of a loan. Reconveyance is typically used with deed of trust.
A Subordinate lien is:
The same as a second mortgage. It may also be called a junior lien.
What is a mortgage?
A legal document that connects a promissory note with the collateral used to secure the note.
A deed is:
A legal instrument that conveys title to real property.
An amortization schedule is:
A table providing the periodic payments needed to pay off a loan by the end of its term. The payments include principal and interest.
Qualified mortgages may not have Back-end DTI exceeding:
43%
What is a note?
A legal document that obligates a borrower to repay a loan. It specifies the terms by which the repayment will occur. It may also be called a promissory note.
VA underwriters use a debt ratio of:
41%
Discount points are paid to?
The lender at closing to reduce the note rate of the loan
Securitization is used to?
Pool similar types of loans to create mortgage-backed securities for sale on the financial market. These securities are used to create a renewable source of funds for lenders.
When does “Dry Settlement” occur?
Parties meet to execute documents, but funds are not disbursed.
When does “Wet Settlement occur”
Parties meet to execute documents and funds are subsequently disbursed.
Name four (4) involuntary liens that could be filed on a property.
Tax liens
Mechanics liens
Judgements
Attachments
What type of lien is a voluntary lien on property?
A mortgage is a voluntary lien
What is the definition of “Real Property”?
Land and anything that is permanently affixed to it.
Tom Brown is a nurse at the local hospital. He has worked the night shift for three years and plans to continue this schedule. His base pay is $29.50 per hour with a 5% shift differential. He averages 35 hours per week. What is his qualifying income?
Calculate the shift differential first: $29.50 * 5% = 1.475.
So he gets an additional $1.475 per hour.
So, $1.475 + $29.50 = $30.975.
$30.975 * 35hrs x 52 weeks / 12 = $4,697.87
If the purchase price is $300,000 and the loan amount is $250,000 and the appraisal value is $275,000…what is the LTV?
90%
$250,000 ÷ $275,000
Suppose the payment is late on a conventional loan and the monthly principal is $1,000, the monthly interest is $500, the monthly taxes are $125 and the monthly insurance is $25.00…what is the amount of the late payment?
$75 ($1,500 x 5%)
- Remember – late charges are not calculated on the taxes and insurance!
Suppose the payment is late on a FHA loan and the monthly principal is $1,500, the monthly interest is $150, the monthly taxes are $105, the MIP is $210 and the monthly insurance is $33.00…what is the amount of the late payment?
$66
$1,500 + $150 x 4%
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Housing Expense Ratio?
28% ($1,400 ÷ $5,000)
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Debt to Income Ratio?
32% ($1,400 + $200 ÷ $5,000)
What type of property is NOT covered by RESPA rules and regulations?
All cash sales
Residential units of more than 4
Property 25 acres or more
Commercial property
According to RESPA Section 6 - a servicer must make contact with a borrower after how many days of a missed payment?
36 days
A lender/servicer must inform the borrower of the available loss mitigation options after ____ days of missed payments?
45 days
Which regulation allows the borrower to sue for “treble” damages?
RESPA Section 9
What law requires the lender to provide an annual summary of the activity associated with the borrower’s impound account?
RESPA Section 10
The servicing transfer statement must be provided to the borrower ______ days prior to transfer.
15 days
What are the six (6) items that make a “complete” application?
Borrower's Name Social Security Number Address of Subject Property Borrower's Monthly Income Estimated Value of the Property Loan Amount applied for
The “Know Before You Owe” disclosure must be provided within _______ days of a complete application?
3 days
The “Know Before You Owe” disclosure must be provided for what type of transactions?
Purchase Only
If the application is withdrawn within the first _____ days or the lender declines the application within the first _____ days, the lender is NOT required to provide the ____________ to the borrowers.
3, 3, initial disclosure
________________ occurs
if the lender chooses the hazard insurance company when the borrower allows the policy to lapse.
Forced-placed insurance
Which items have a zero (0) tolerance between the Loan Estimate and the Closing Disclosure?
Real estate transfer taxes Loan origination fees Interest rates Appraisal Credit report
Which items have a 10% tolerance between the Loan Estimate and the Closing Disclosure?
Government recording fees, title insurance
On what document would you find information regarding the “RATE LOCK”?
The Loan Estimate ONLY
What is the penalty for violating RESPA?
$10,000 and/or up to
1-year in jail
Which Regulation is Regulation “Z”?
Truth In Lending Act (TILA)
Which disclosure requires that entities that purchase or acquire mortgage loans to notify the borrower and provide the name, address and telephone number of the new owner within 30 days of acquisition?
Transfer of Ownership Disclosure
The total “interest” being charged on the loan, expressed as a percentage is known as the ____________________?
Total Interest Percentage (TIP)
If a borrower was not properly notified of his/her right to rescind, how long can the rescission period be extended?
Three (3) years
How many copies of the “Right to Rescind” must each borrower receive?
Two
What law requires that the borrower receive the Right to Recession notice?
TILA (Reg Z)
What does APOR stand for?
Average Prime Offer Rate
When is a loan considered a Section 32 (High Cost) Loan?
A loan will be considered a High Cost (Section 32) loan if its APR exceeds the APOR by more than 6.5% for a first lien or 8.5% for a subordination lien, or when the total points and fees payable in conjunctions with the loan exceed 5% (8% for loans of $20,000 or less).
When is a loan considered a Section 35 (High priced) Loan?
A loan will be considered a High Priced (Section 35) loan if it’s APR exceeds the APOR by more than 1.5%, 2.5% for jumbo first-lien loans and 3.5% for subordinate liens.
What type of loans “require” an impound account?
Section 35 High Priced Loans
When is the CHARM booklet required?
When the consumer received an adjustable rate mortgage
What is the regulation/rule that states that a loan originator cannot receive Dual Compensation?
Loan Originator compensation rule
Which law states that a loan originator can only be paid a commission by one source, either the borrower or the lender – but not both?
Loan Originator compensation rule
If a lender issues a Qualified Mortgage, it is assumed that the borrower has satisfied what rule?
The Ability-To-Repay (ATR) rule
What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
43%
What is the max term (length) allowed for a mortgage to be considered a qualified mortgage?
30 years
What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
43%
What type of mortgage is not allowed to have toxic features such as: interest only, negative amortization, no income/no asset income qualifications or prepayment penalties?
Qualified Mortgage
What law are you violating if you ask a borrower (on a credit application) if he or she is planning to have any more kids in the future?
ECOA – Reg B
What law states that married spouses can keep separate credit bureau files, if requested?
ECOA (REG B)
Which law states that if a Loan Originator is taking an application “face-to-face” he/she must complete the Government Monitoring section (Section X) of the 1003 application?
ECOA (REG B)
Which law states that an adverse action notice (denial) must be in writing?
ECOA (REG B)
If an applicant receives an adverse action notice – he can request a statement of “more specific” reason within _______________ of receipt of the notice?
60 days
ECOA states that creditors cannot discriminate against the __________ of the borrower’s income, however, they can discriminate against the _____________ of the borrower’s income.
Cannot discriminate against the source, however can discriminate against the amount.
How long must ECOA records be kept?
25 months
How long does a consumer have to sue for a violation under ECOA?
24 months
Which law states that a borrower is entitled to receive a free copy of his credit score once a year?
None. Credit “score” is never free
How long do “unpaid” taxes appear on a credit report?
Forever
How long does a judgment appear on a credit report?
7 years
If a consumer has questions regarding his/her application, who should be contacted?
The lender
If a consumer has questions regarding his/her credit scores, who should be contacted?
The credit reporting agency(ies)
If a consumer is denied credit, what law states that the lender must provide the name, address, and telephone number of the credit reporting agency used to make the decision?
FCRA – Regulation V
What law requires lenders to provide the borrower with the National Credit Score Disclosure, which informs him/her of which credit score was used to approve the mortgage loan?
FACT Act
What law is the loan originator violating if he leaves the clients file on his desk at the end of the day?
FACT Act
If a consumer’s file is no longer needed, what is the proper way to dispose of it?
Burn or Shred it
What law requires lenders to file monthly reports regarding the ethnicity, race, and sex of all applicants?
HMDA – Regulation C
An individual who obtains or has obtained a financial product or service from financial institution for person, family or household reasons is referred to as a ______________________ according to the GLBA Act?
Consumer
An individual/consumer with a continued relationship with a financial institution is referred to as a _______________ according
to the GLBA Act?
Customer
Gaining information under false pretense is referred to as ____________ under the GLBA?
Pretexting
According to the DNC list, telemarketers (including loan originators) must search the national DNC list every _______________ days.
Every 31 days
A SAR (suspicious activity report) must be filed by a mortgage loan originator (MLO) when a person engages in suspicious activity of $_______________ or more?
$5,000
Which law increases the ability of law enforcement agencies to search telephone, email, medical and financial records of consumers?
USA Patriot Act
Which law is responsible for the establishment of the anti-money laundering act?
USA Patriot Act
Which law was established to identify and prevent redlining?
Home Mortgage Disclosure Act (HMDA)
How long must commercial advertising records be kept?
2 years
What law was created to prohibit money laundering and financing of terrorists?
USA Patriot Act
What is the name of the document that indicates the amount that the Veteran is entitled to?
Certificate of Eligibility (COE), which shows the amount of his entitlement.
What is the maximum flat fee that a lender can charge for a VA loan to cover lending cost?
Lender may charge a flat fee, up to 1% of the loan amount, to cover the lender’s costs.
An abusive practice in which a loan is refinanced without any tangible net benefit to the borrower is called?
Loan Flipping
FHA imposes restrictions requiring the borrower not to resell the property for the first _________ days.
90 days
FHA requires the lender to investigate the transfer history of property for the _______ years before a resale, in an attempt to identify potential flipping schemes.
3 years
What type of loans have PMI (Private Mortgage Insurance)?
Conventional loans where the borrower puts less than 20% down payment
What type of loans have Up Front Mortgage Insurance Premium?
FHA Loans
In a conventional loan, how much of the down payment must come from the borrowers own (personal) funds?
5% of the down payment
What does the Debt Services portion of the monthly payment include?
Debt Services includes the principal and interest portion only (P and I)
What is a HECM?
Home Equity Conversion Mortgage (aka) a FHA reverse mortgage
When is a reverse mortgage due?
Borrowers dies, sells the home, or cease to live in the home for 12 consecutive months
What type of mortgage is it when the borrower is not required to make a payment, but the balance of the loan rises and the equity shrinks?
Reverse Mortgage
What type of mortgage is it when the balance continues to grow, even though the borrower is making the full payment each month?
Negative amortization
A type of seller financing in which the seller finances enough money to cover the existing loan balance as well as any additional funds needed from the borrower is called a __________________.
Wraparound mortgage
What type of mortgage is also called a self-liquidating mortgage and is designed to pay off the entire balance at the end of the loan?
Fully-amortized mortgage
A mortgage that is a combination of fixed and adjustable. For example, 5/25 – is known as a __________________ mortgage?
Hybrid Mortgage
A written instrument used to convey title or transfer ownership?
Deed
_________________ protects the homeowner against defects that occurred in the past, such as undisclosed liens, heirs, fraudulent documents, etc.
Title insurance
A _________________ loan is a short-term cash out loan made on the equity in the applicant’s current property in order to allow them to close on the purchase of a new transaction.
Bridge loan
The area medium income (AMI) cannot exceed __________ in order to be approved for a USDA/Section 502 loan?
115%
What type of loan program provides 100% financing in rural or farm communities/areas?
USDA Loans
If a credit report doesn’t show the required minimum payment amount, the lender must use ___________________ for underwriting purposes?
5% of the outstanding balance
If a borrower rents a room for $1,500 a month, how much would the underwriter count as income?
$1,125.00
$1,500 x 75% = $1,125
If a borrower receives $1,500 a month child support income, how much would the underwriter count as income?
$1,875.00
$1,500 x 125% = $1,875
(Gross up by 25%)
If a borrower receives $1,200 a month SSI income, how much would the underwriter count as income?
$1,500.00
$1,200 x 125% = $1,500
(Gross up by 25%)
Calculate 3 points if the loan amount is $500,000 and the sales price is $525,000.
$15,000
$500,000 x 3% = $15,000
On a conventional loan where the borrower is making a down payment of $20,000, how much of the down payment must be from the borrower’s own funds?
$1,000
5% of the down payment must be from the borrower’s own funds. $20,000 x 5% = $1,000
An individual that meets the definition of a loan originator, but works for a bank is called a ___________________?
Registered Loan Originator
To be approved as a Loan Originator, a licensee must not have been found guilty of any felony in the past ____________ years.
7 years
The only exception to a person being granted a license if he/she has been found guilty of a felony in the past 7 years (or if the felony deals with money crimes) is if he/she has received a __________________.
Pardon
What are the three (3) protection options each state must have in place for loan originators?
Minimum net worth, surety bond or reserve account
What is the penalty for violating the safe act?
$28,474 as of January 12, 2018
previously $25,000
When must the borrower receive the Initial Escrow Account Disclosure?
Within 45 days after the closing date (if it was not received at closing)
When must the borrower receive Affiliated Business Arrangement Disclosure (afba)?
When the referral is made (immediately) if not then, prior to doc signing.
When must the borrower receive the Privacy Policy Notice?
At first contact, and thereafter, once a year as long as he/she remains a customer
An applicant is purchasing a home for $100,000 utilizing FHA financing. The home appraises for $98,000. What is the minimum dollar amount that the borrower must contribute as a down payment on this transaction?
$98,000 x 3.5%
How long would an unpaid tax lien remain on a consumer’s credit report?
Forever
What is the penalty for knowingly violating the TRID rules?
1,000,000 per day
What are the two agencies that created the NMLS System?
American Association of Residential Mortgage Regulators (AARMR) and the Conference of State Bank Supervisors (CSBS)
Mary wants to obtain FHA insured financing on her primary home. Her housing expense will be $800.65. She also has the following debt: $192.65 (auto payment) and $40 (credit account). Based on her debt, what would be Mary’s required stable monthly income to qualify for this loan using the total debt-to-income ratio?
$2,403.02. You MUST know the ratios for FHA to do this problem. The back-end (total DTI) for FHA is 43%. $800.65 + 192.65 + $40 = $1,033.30 $1,033.30/43% = $2,403.02
For an ARM, an introductory rate that is lower than the fully indexed rate at the time of closing is called a _________ rate?
Teaser Rate
According to the TRID Rules, if the Closing Disclosure is mailed to the borrower, when is it considered received?
Three (3) days after it was mailed/sent
What is the formula for calculating the CLTV?
1st Mortgage + 2nd Mortgage ÷ the sales price or appraised value (whichever is lower)
What is the monthly PMI on a 90% LTV loan for a property valued at $500,000 if the PMI factor is .60%?
$225.00
$500,000 x 90% x .60% ÷ 12
Harold is refinancing his home. The property appraised for $260,000, and Harold’s loan amount is $195,000. What is the Loan-to-value for this transaction?
75%
What is the penalty when a loan applicant makes a false statement on the 1003?
May face a five-year jail term
3/1, 5/1, 7/1 and 10/1 ARMs; these are examples of what types of mortgage?
These are adjustable rate mortgages, in which, rate is fixed for three year, five year, seven year and 10 year periods, respectively, but may adjust annually after that. Also called Hybrid ARMS.
What is the official name for the 1003 form?
Form 1003 is also known as the Uniform Residential Loan Application (URLA). Freddie Mac also uses the same application form and is known as the Freddie Mac Form 65.
What is a 1031 Exchange?
A tax deferred exchange of “like” real estate, used to offset or avoid capital gain tax.
What is the name of the form that the IRS uses to retrieve past tax returns, W-2, and 1099 transcripts that are on file with the IRS?
4506-T FORM
What document is a summary of recorded transactions, concerning a particular property?
Abstract of title
What is the clause/condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if regular mortgage payments are not made or for breach of other conditions of the mortgage?
Acceleration Clause
Interest earned but not yet paid is called what?
Accrued Interest
What is included in Acquisition Costs?
Purchase price, plus closing costs, minus seller credits.
What type of mortgage, is a mortgage in which, the interest rate is adjusted periodically based on a pre-selected index?
Adjustable Rate Mortgage (ARM)
An opinion of market value as of a specific date is known as what?
Appraisal
The date that the interest rate changes on an adjustable rate mortgage (ARM) is known as what?
Adjustment Date
The measurement of the full cost of a loan, including interest and loan fees, expressed as a yearly percentage rate is known as what?
Annual Percentage Rate (APR)
If there is greater than one percent (1%) ownership interest of a party in both the business referring out the service and the business receiving the referral, what document is required?
Affiliated business arrangement (ABA)
Loan payment, divided into equal periodic payments, calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance is known as what?
Amortization
What does the Consumer Reporting Agency (or Bureau) do?
- An organization that handles the preparation of reports used by lenders to determine a potential borrower’s credit history.
- The agency gets data for these reports from a credit repository and other sources.
- The Big 3: Experian, Equifax and Trans Union
What is a Contingency?
- A condition that must be satisfied, before a contract is legally binding, before a sale can close.
- Real estate sales contracts often have a specific date or number of days, in which, the contingencies must be removed.
The “When Your Home is on the Line” disclosure is required by which regulation?
TILA – Regulation Z
What is a Conventional Loan?
A mortgage not insured by FHA or guaranteed by VA.
When would a Conversion Clause/Option be used?
- A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term.
- Usually conversion is allowed at the end of the first adjustment period.
- The conversion feature may cost extra.
- Also referred to as a Convertible ARM.
What is a Conveyance?
The transfer of a deed (or possibly a lease or mortgage).
Covenants, Conditions and Restrictions (CC and Rs) are what type of documents?
A document defining the use,
requirements and restrictions of a property.
What is a Credit Report?
A report documenting the credit history and current status of a borrower’s credit standing.
How long can a registered MLO, who is transferring from a depository institution in order to become a state-licensed MLO, originate mortgages prior to completing the 20hr course?
120 days
Transitional Authority
What is a CRV?
- Certificate of Reasonable Value.
- A property appraisal performed by a VA-approved appraiser that established the limit on the principal of the VA loan.
When should an ARM disclosure be provided to a borrower?
Within three days of the application, whenever an adjustable-rate mortgage transaction is contemplated. (TILA)
Who receives the CHARM Handbook?
The Consumer Handbook to Adjustable-Rate Mortgages (“CHARM” booklet) must be presented to the consumer within three days of applying for an ARM (adjustable rate mortgage) loan. (TILA)
What is an Assessment?
A local tax, levied against a property, for a specific purpose, such as: a sewer or street lights.
The transfer of a mortgage from one person to another is known as what?
Assignment
A document showing the financial situation-assets, liabilities and net worth of a person at a specific point in time is known as what?
Balance Sheet
What is a Basis point?
A unit of measure: 1/100th of one percent
For example, the difference between a 9.0 percent loan and a 9.5 percent loan is 50 basis points
What is a Bi-weekly Payment Mortgage?
A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). There are 26 bi-weekly payments a year.
What is a Blanket Mortgage?
A mortgage that covers more than one parcel of land.
Bona fide is also known as what?
“In good faith” - A “bona fide” offer, is an offer made in good faith.
Who’s considered a Borrower (Mortgagor)?
The borrower/mortgagor is the one who applies for and receives a loan, in the form of a mortgage, with the intention of repaying the loan in full.
What are Caps (Payment)?
Consumer safeguards, which limit the amount of change to the interest rate, for an adjustable rate mortgage.
Who receives a Certificate of Eligibility?
The document given to qualified veterans, which entitles them to VA guaranteed loans for homes, business and mobile homes.
What is a Certificate of occupancy?
Document, issued by local government agency, stating that a property meets the requirements of health and building codes.
What is a Certificate of Reasonable Value (CRV)?
An appraisal issued by the Veterans Administration showing the property’s current market value.
What is the Chain of title?
The chronological order of conveyance of a property, from the original owner to the present owner.
What is a Clear title?
A marketable title, free of clouds and disputes.
COFI/Cost of Funds Index is used to calculate what?
- An index used to calculate the rate of an adjustable-rate mortgage.
- The rate adjusts based on a cost-of-funds index often the 11th District Cost of Funds.
What is Combined Loan-to-Value (CLTV)?
The ratio of the total mortgage liens against the subject property, to the lesser of either the appraised value or the sales price.
Conforming Loans are what type of loans?
A mortgage loan under the maximum amount of loans that FNMA (Fannie Mae) and FHLMC (Freddie Mac) are legally allowed to buy.
When are Construction Loans used?
A short-term interim loan to pay for the construction of buildings or homes.
What is the name of the agency that enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit accounts?
Consumer Financial Protection Bureau (CFPB)
What is a Rate Lock?
A commitment issued by a lender, to a borrower guaranteeing a specified interest rate and lender costs for a specified period of time.
The Real Estate Settlement Procedures Act (RESPA) protects who?
- A consumer protection law, which requires lenders to give borrowers advance notice of closing costs/settlement services.
- Also known as Regulation X
- Memory tool: REXPA, RESPAX
What is Real Property?
Land and everything, which is Permanently Affixed to it.
Reclamation is the right of which person?
The right of the person, with title to a property, to recover it from the debtor in case of a bankruptcy.
Reconveyance transfers a property to whom?
The transfer of property back to the owner when a mortgage is fully repaid.
What is a Recording?
The act of entering documents concerning title to a property into public records.
Refinance/Refinancing a loan occurs when?
Obtaining a new mortgage loan on a property, already owned, often to replace existing loans on the property.
Regulation B (ECOA) is also known as what?
The Equal Credit Opportunity Act.
Makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, age, or if the applicant is on a public assistance program.
Regulation V (FCRA) regulates what?
- The Fair Credit Reporting Act.
- The Fair Credit Reporting Act (FCRA) is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information.
- Memory tool: V= Very Fair, FCRAV4
Regulation Z (TILA) was designed to promote what?
- The Truth in Lending Act.
- Designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner.
- Memory Tool: TILA the Godzilla, TILAZ
Rescission gives the homeowner the right to do what?
The cancellation of a contract.
What is a Reverse Annuity Mortgage (RAM)?
- A form mortgage, in which, the lender makes periodic payments to the borrower, using the borrower’s equity in the home as collateral for and repayment of the loan.
- More commonly called a HECM (Home Equity Conversion Mortgage) or simply a Reverse Mortgage.
What is a Reverse Mortgage (HECM)?
- HECM or Home Equity Conversion Mortgage
- Reverse mortgages unlock the equity in the home.
- Multiple payout options
- For borrowers 62+
The Safe Act (2008) was designed for what?
Secure and Fair Enforcement for Mortgage Licensing Act. The S.A.F.E. Mortgage Licensing Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.
Who issues a Satisfaction of Mortgage?
- The document issued by the lender when the mortgage loan is paid in full.
- Also called a “release of mortgage.”
What is a Second Mortgage?
A mortgage made subsequent to another mortgage and subordinate to the first one.
Who’s part of the Secondary Mortgage Market?
- The market, into which, primary mortgage lenders sell the mortgages they make to obtain funds to originate more new loans.
- This includes investors such as Fannie Mae, Ginnie Mae and Freddie Mac.
What is a Security?
The property that will be pledged as collateral for a loan.
A Seller Carry Back is what type of agreement?
An agreement in which the owner of a property provides financing often in combination with an assumable mortgage.
Who is a Servicer?
An organization that collects principal and interest payments from borrowers and manages the borrower’s escrow accounts.
What is Servicing?
All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.
What are Settlement Costs?
- Expenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property. Also called Closing Costs.
- Closing costs normally include an originator fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.
- Closing costs will vary according to the area country and the lenders used.
Who creates Sweat Equity?
Equity created by a purchaser performing work on a property being purchased.
A Tax Lien is a claim against what?
A claim against a property for unpaid taxes.
What is a Tax Sale?
Public sale of property, by a government authority, as result of nonpayment of taxes.
A Title shows what?
A document, which gives evidence of an individual’s ownership of property.
A Total Expense Ratio (back-end ratio/total debt ratio) includes what?
Total obligations (PITI + all debt) divided by the gross monthly income – expressed as a percentage.
What is the law that requires that the Annual Percentage be disclosed to a home buyer, shortly after they apply for the loan?
TILA
Also known as Regulation Z.
Memory tool: TILA the Godzilla, TILAZ
Evaluating a loan application package and making the decision, whether to make a loan to a potential home buyer, based on credit, employment, etc. is a process known as?
Underwriting
What federal legislation allows the borrower to challenge the value stated in an appraisal report?
ECOA – Regulation B
Pretexting is prohibited based on what law/regulation?
GLBA
Which regulation states that it is a violation to discriminate against a borrower who’s only income is social security benefits?
ECOA
What is a Deposit/Earnest Money Deposit?
- Cash paid when a formal sales contract is signed.
- The deposit is usually held by a third party until the sale is complete.
Depreciation happens when?
When the value of property declines.
What are Discount Points?
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100000 mortgage would cost $2000).
What was the purpose of the Dodd-Frank Act?
Purpose:
- To promote financial stability
- To end “too big to fail”
- To protect taxpayers by ending bailouts
- To protect consumers from abusive practices
- Established the Consumer Financial Protection Bureau (CFPB)
Which law requires notification to the borrower before the servicing of the loan is transferred to someone else?
RESPA
What’s an Encumbrance?
- A legal right or interest in a property that affects title and lessens the property value.
- Encumbrances can take the form of claims, liens, unpaid taxes and so on.
The value remaining in property after all liens and debts are considered is known as what?
EQUITY
What type of ARM allows the borrower to change from an adjustable rate mortgage to a fixed rate mortgage?
CONVERTIBLE ARM
The FACT Act (2003) was an amendment to what earlier law?
- Fair and Accurate Credit Transactions Act amended Fair Credit Reporting Act (Reg V).
- The act allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies.
- The act also contains provisions to help reduce identity theft.
A veteran’s entitlement for a VA loan is specified in what document?
The Certificate of Eligibility (COE) is the document issued by the VA that specifies the amount of loan guarantee for which the veteran is eligible.
The APR on a Loan Estimate for a 30-year fixed-rate loan is 6.25% and the APR on the Closing Disclosure is 6.5%. After redisclosure, the borrower must wait ___________ to close the loan.
THREE BUSINESS DAYS
According to the GLB Act, an individual who obtains or has obtained a financial product or service from a financial institution is known as a what?
CONSUMER
If Martin sells his home five months after purchasing the property, the sale price must exceed Martin’s acquisition cost by more than _____ to require a second appraisal.
20%
A seller who acquired a home within six months of resale and is selling the home for more than 20% of the original acquisition cost must have a second property appraisal performed on the property.
What is the Federal Reserve?
- The central bank of the United States and major regulatory agency for many commercial banks.
- Commonly referred to as “The Fed”.
Fee simple is what type of ownership?
Absolute ownership of real property.
What is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens?
A subordination agreement is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens.
What is a First Mortgage?
The primary lien against a property.
A Fixed Rate (Mortgage) has what type of interest rate?
An interest rate is fixed for the term of the loan.
Flood Insurance is what type of insurance?
A form of hazard insurance required by lenders to cover properties in flood zones.
What is FNMA?
- The Federal National Mortgage Association is a secondary mortgage institution.
- FNMA buys VA, FHA and conventional mortgages from primary lenders.
- Also known as “Fannie Mae.”
What is Forbearance?
Grace period given when a lender postpones foreclosure, to give the borrower time to catch up on overdue payments.
Foreclosure is known as?
- A legal process, by which, the lender or the seller forces a sale of a mortgaged property, because the borrower has not met the terms of the mortgage.
- Also known as a repossession of property.
Freddie Mac is a nickname for what?
The nickname most commonly used for the Federal Home Loan Mortgage Corporation.
A Fully Amortized ARM is what type of rate?
An adjustable rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance at the interest accrual rate over the amortization term.
Ginnie Mae (GNMA) is also known as what?
The nickname most commonly used for the Government National Mortgage Association.
Government National Mortgage Association (GNMA) is also known as what?
- Also known as “Ginnie Mae.”
- Provides sources of funds for residential mortgages insured or guaranteed by FHA or VA.
A type of flexible payment mortgage, where the payments increase for a specified period of time and then level off is known as __________________.
A Graduated Payment Mortgage (GPM)
Usury is interest charged when?
Interest charged in excess of the legal rate established by law.
What is a Variable Rate Mortgage (VRM)?
Another name for an Adjustable Rate Mortgage (ARM).
A document, signed by the borrower’s financial institution (BANK), verifying the status and balance of his/her financial accounts is known as what?
A Verification of Deposit (VOD)
A document, signed by the borrower’s employer, verifying his/her position, salary overtime, bonuses and the likelihood of continued employment is known as what?
A Verification of Employment (VOE)
A document, signed by the borrowers servicer, verifying the status of the mortgage is called what?
A Verification of Mortgage (VOM)
A document, signed by the borrowers landlord, verifying their rental/lease payment history is called what?
Verification of Rent (VOR)
A Margin is added to what to determine the fully-indexed rate?
- The amount a lender adds to the index on an adjustable rate mortgage to establish the fully-indexed rate.
- The margin is the lender’s profit.
- Index + Margin = adjusted interest rate.
What is a Marketable Title?
A title which is free and clear of liens, clouds or other defects, which would prevent the sale of the property.
A Mechanic’s Lien is used when?
- A mechanic’s lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.
- The lien exists for both real property and personal property.
- It is considered a cloud on title.
MIP (Mortgage Insurance Premium) is purchased by whom?
- Insurance from FHA, to the lender, against incurring a loss, if the borrower’s were to default.
- Insurance purchased by borrower to insure against default on a FHA loans.
- MIP protects the LENDER
A Monthly Housing Expense includes what?
- Total monthly expense of principal, interest, taxes, hazard insurance and mortgage insurance (PITI).
- It also includes any HOA (Home Owners Association) dues. (PITIA)
What is a Mortgage?
A legal document, which pledges a property to the lender as security for payment of a debt.
The Mortgage Disclosure Improvement Act (MDIA) 2008 amended what?
- An amendment to Reg. Z.
- Requires disclosures (LE) to be sent to the borrower within three (3) business days after receiving borrowers application.
- The loan may not close until after the seventh (7th) business day after disclosures have been delivered or mailed to the borrower.
Who is a Mortgagee?
The lender in a mortgage loan transaction.
What is Private Mortgage Insurance?
Money paid to insure the mortgage when the down payment is less than 20 percent.
Who is a Mortgagor?
The borrower or homeowner.
What is Negative Amortization?
- When your monthly payments are not large enough to pay all the interest due on the loan.
- This unpaid interest is added to the unpaid balance of the loan.
- If the borrower does not increase payments, the home buyer will end up owing more than the original amount of the loan.
A Non-Conforming Loan cannot be sold to who?
- A conventional loan that cannot be sold to Fannie and Freddie Mac.
- Often, these loans are larger than the conforming loan amount.
A Notice of Default (NOD) is given to who?
Written notice to a borrower, that a default has occurred and that legal action may be taken.
What is the Office of Comptroller Currency?
The federal financial regulatory body, which oversees the nation’s federally chartered banks and savings institutions.
Title VIII is commonly called the ______________.
Fair Housing Act
_________ requires the true cost of credit over the term of the loan to be displayed as a PERCENTAGE.
TILA
_________ displays the true cost of credit over the term of the loan to be displayed as a DOLLAR AMOUNT.
RESPA
